The Directorate General of Central Excise Intelligence has registered a case of tax evasion of around Rs 75 crore against online travel service provider. DGCEI alleged that the company had not deposited service tax it collected from customers and a senior official was arrested earlier last week relating to this.
As per DGCEI investigation, MakeMyTrip was collecting 2 types of taxes–service tax on 60% of the rate negotiated by MakeMyTrip with the hotels towards renting of rooms and service tax on 10 per cent of the gross value on the customer vouchers by treating themselves as tour operators.
The second category of service tax was being mentioned as MMT (Make My Trip) Tax by the firm [source].
It is also found by the DGCEI that MakeMyTrip was depositing so called MMT Tax and not the the one collected from the customers towards renting of hotel rooms, they said.
“At MakeMyTrip, we strongly believe in an ethical, transparent and compliant corporate culture and abide by all laws and regulations of the country. The service tax case in question is potentially an industry issue that can impact all Online Travel Agents (OTAs).
We have a strong case as advised by our tax advisors and therefore will be contesting the matter with the appropriate authorities. We are extending our full cooperation to the authorities in the investigation. Further, the company official who was detained by the authorities has already been released,” [says MMT]
MakeMyTrip recently raised $180mn from China’s CTrip.